When parents get a divorce, it’s best that they consider whether child support is necessary. You need to carefully think about custody arrangements for the best interests of the child. Sometimes, parents will share parenting responsibilities equally.
However, usually, one parent will become the primary caregiver. If that parent isn’t as financially well off as their former partner, the Court may require the former partner to pay child support. There are different ways to organise periodic child support payments.
In this article, we’ll look at binding child support agreements and analyse their advantages and disadvantages relative to other options.
Key takeaways
A binding child support agreement provides financial support for a parent with parenting responsibilities.
Parties must agree to the terms, meet a minimum threshold of care and receive independent legal advice.
Percentage of care comes in various levels depending on how many nights the child spends with you.
You may need to provide proof of your percentage of care to Services Australia.
Advantages include flexibility in how the agreement is drafted, security in the agreement remaining in place and sound legal advice.
Disadvantages include being potentially costly, locking parents into an arrangement for a significant amount of time and potential issues caused by poor drafting.
What is a binding child support agreement?
A binding child support agreement is a way for parents to arrange support payments for the benefit of their children. There are certain criteria the parties must satisfy before the agreement will be considered legally binding.
The support can be paid as a lump sum or ongoing payment. If you opt for a lump sum, you’ll need to get an assessment from Service Australia. They will use an 8-step formula to determine the amount payable.
Legal requirements
Here are the requirements to make a binding child support agreement legally enforceable.
Agreement
Both parties must agree to the amount of child support payable to the receiving parent. The agreement can’t be made through force or undue influence.
Care percentage
In order to receive support payments, you must meet a minimum threshold in the amount of care you provide. Services Australia is Australia’s child support agency. According to them, a parent must provide at least 35% of care before they can get child support.
Legal advice
Parties can’t enter an agreement alone. Before signing anything, each party will get independent legal advice from a child support lawyer. The lawyer ensures that their client knows what their rights and obligations will be under the terms of the agreement.
The lawyer’s advice will also ensure the parties involved understand the agreement’s effects and how its terms impact their interests. The lawyer will provide a certificate stating that the legal advice was given.
Learn More: What is Child Support in Australia?
Determining the percentage of care
Services Australia sorts the percentage of care into five levels.
Below regular care
0% to 14% of care. This works out to:
0 – 51 nights per year.
0 – 2 nights per fortnight.
At this level, the paying parent isn’t eligible for tax benefits like the Family Tax Benefit (FTB).
Regular care
14% – 35% of care. This means either:
52 – 127 nights per year.
2 – 4 nights per fortnight.
A paying parent won’t get FTB but may be able to receive other concessions.
Shared care
35% – 65% of care. This amounts to:
128 – 237 nights per year.
5 – 9 nights per fortnight.
The parties may be able to share FTB.
Primary care
35% – 86% of care. This means:
238 – 313 nights per year.
10 – 12 nights per fortnight.
Above primary care
Any care percentage above 86%. At this level, the party can receive 100% of any FTB.
Proof of care
If you can’t agree on what percentage of care each parent has, Services Australia can help you work it out. They will likely ask for evidence to assess your care percentage. Evidence may include:
A calendar or diary that sets out what days you are caring for the child.
A court order or a parenting plan that shows what percentage of care you have. You’ll need to provide evidence that you are meeting your obligations.
Documentation that shows when your child is in daycare or other regular activities.
Records that show when the child has attended health care or other services.
Records showing when a child has travelled. This may include airline bookings or passports that contain travel dates.
Statements from people familiar with your situation who can attest to your percentage of care.
If you need help with the Binding Child Support Agreement, Andrews Family Lawyers can help.
Advantages
There are various reasons why a binding child support agreement might suit your circumstances over a limited child support agreement.
Flexibility
Unless you’re organising a lump sum payment, you don’t need to get a child support assessment from Services Australia. This gives you some flexibility about how you work out what should be paid. You can use a formula of your choosing and make whatever considerations you deem appropriate.
You can also decide that the paying parent will cover certain expenses. For example, they may pay for private school fees or holidays. This can be important if a child has extensive medical needs. We all know how expensive healthcare can be. A binding agreement can ensure the paying parent covers those costs.
Secure
It’s not easy to put a binding child support agreement aside. They can’t be cancelled on the whim of either parent. Once you formalise the agreement, you can ensure the financial support will remain in place.
There may be legitimate reasons to want to terminate the agreement. However, both parents must agree to the termination.
Legal advice
Both parties must receive independent legal advice. This ensures that you enter the agreement with full knowledge about how it will affect you. A good child support lawyer will protect your interests and work to ensure that the agreement properly reflects your child’s needs.
Disadvantages
Binding child support agreements are right for everyone. While there are reasons you may want to create one, there are also reasons it might not work for you.
Potentially costly
Since both parties must agree to the termination of the agreement, costly disputes can arise. The paying parent may not be able to meet their obligations anymore and seek to end the agreement. However, if the receiving parent doesn’t agree, the matter may end up going to Family Court to settle the issue.
If the parents do agree to end the agreement, they must enter a termination agreement. The parties will need to seek legal advice from a family lawyer again. This incurs additional costs.
Significant commitment
A binding child support agreement ends when a child turns 18. This could mean a paying parent is locked into providing financial support for a long time if the agreement began when the child was very young. A lot can happen in that time that affects a parent’s ability to continue making payments.
If you’re not absolutely confident of your capacity to meet your obligations for the entirety of the agreement, a binding agreement may not be the best option.
Poorly drafted
It’s possible that a binding agreement won’t be drafted in a way that accurately captures your circumstances. You may not make adequate provisions for potentially significant events. For example, the paying parent could suffer an injury that leads to a disability or lose their job.
This will affect their financial stability and, unless the agreement covers such events, will make the agreement difficult to continue.
Conclusion
Binding child support agreements are one way parents can organise support for their children after a divorce. Binding agreements are flexible and stable. With good legal advice, you can be confident that the agreement will adequately reflect what’s best for your family.
However, they can be expensive. Disputes or unforeseen circumstances sometimes crop up. These situations can make binding agreements more complicated. They’re also a big commitment that can last for many years.
You may not be sure if a binding child support agreement is right for you. That’s natural as it’s a big decision.
If you want expert advice, contact our office today. Our team will discuss with you the best option for you and your children.
